Difference between Forex and Stock Trading | Malc Stone
Many people believe that Forex and stock trading is the same thing which gives them a lot of preconceived ideas and leads to a lot of surprises, especially if they are going to try their luck in one of these markets. Although they have a few similarities and might look like the same market for an outsider, once you start learning more about them, you will notice that there are many things that make them different. Here are some of the biggest differences between these two types of markets explained for anybody interested in getting involved in one or the other.
One of the major differences between Forex and Stock Trading is the trading speed. In Forex, a person could make a trading almost instantaneous, but when dealing with stock markets you depend on the time it takes to execute a single trade, which might make you even miss a certain trade. Since Forex comes with programs that automatically execute your trade, if you are a person who would like to see their results instantly, it might be a hassle to start stock trading, but some might prefer it to Forex.
The hours during which you can trade are different depending on the market. Stock markets usually work for about 8 hours a day but Forex doesn’t have any downtime because it operates 24 hours a day in 3 shifts depending on different time zones specific to US, Asia or Europe.
The leverage is also different when comparing Forex to Stock Trading. Usually in stock trading you can trade with 2:1 leverage and there are more steps to take before starting: you will have to fill out an application and wait to be approved. There are certain regulations that you need to comply with in order to begin trading. In contrast, Forex is very easy to start with, all you need is to open a Forex trading account and fill it with your personal details. The leverage on Forex if you are trading in the United States is 50:1 and can be variable in different countries. Usually, you will get as much as 200:1 in some countries so, even with the smallest leverage you will still be able to get more than with stock trading.
The trading itself is also very different when using Forex because it involves a lot more variables than stock exchange. Usually, when trading stocks, you have to keep in mind the company and whether it is a valued company and can make money or not. Stock trading also has a lot of regulations and many limits for its users and some might not be into that and would prefer more freedom. This makes Forex a more learning oriented trading tool because you will have to learn much more about certain elements that might influence your outcome. This can be a challenge and if you like that, it can put you ahead of many current traders who don’t like to invest as much time in learning as you do.
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Difference between Forex and Stock Trading | Malc Stone
